Friday, July 23, 2004

[news] Special Reports, Advice, ITO Tidbits & an Announcement

Friday, July 23, 2004
Dateline: China
A few special reports to mention.  The current (15 July) issue of CIO Magazine has a cover story on ITO (IT outsourcing) titled, "Outsourcing World Tour 2004" (cute title).  A clickable map covers countries not usually on the short list for ITO, including Chile, South Africa and Thailand.  Covers BPO as well.  See .
Not for everyone, but Washington Technology has a special report on new defense opportunities titled, "Warfare 2.0".  Great report with lots of details.  Includes info about "Starlight" (an XML-based 3D visualization tool), DoD's "Global Information Grid" and a bit of G2 on DARPA's Information Exploitation Office.  (Remember, it was DAPRA's predecessor, ARPA, who funded the creation of the Internet.)  See .
For American firms pondering their China strategy, a "2004 Special Edition" of The McKinsey Quarterly features an article titled, "A Guide to Doing Business in China."  Good advice and shatters many myths, although not specific to ITO.  See .
On a somewhat related topic (albeit focused a bit more on BPO than ITO), Accenture has published "Executive Survey Results" in a report titled, "Driving High-Performance Outsourcing: Best Practices from the Masters."  This seven page PDF report attempts to "provide a snapshot of the choices and challenges facing newcomers to outsourcing:
• "What timeline can we expect, and what kind of partner
do we need?"
• "Which processes should we outsource, and which should
we keep?"
• "How do you structure the deal to allow for changes in the
business environment over the course of the arrangement?"
• "Can you outsource a business function whose processes are
broken, or do you need to fix it first and then outsource?"
• "How does an outsourcing arrangement impact our
relationship with unions?"
• "We have projects going all the time; how do you juggle
all those projects and introduce outsourcing without the
One finding:  "A majority (59 percent) use risk/reward incentives to spur high performance from their outsourcing partners.  Incentives may
be used to reward extraordinary performance or to encourage
higher levels of risk."  For more, see .
Take This to the Bank: Advice for SIs in China

    Ã¥Â¯Â¹Ã¤ÂºÂŽÃ¤Â¸Â­Ã¥Â›Â½Ã¨Â½Â¯Ã¤Â»Â¶Ã¥Â‡ÂºÃ¥ÂÂ£Ã¯Â¼ÂŒÃ¦ÂˆÂ‘们知道国内有很多企业,他们各自都有自己的订单获取方法和途径,但是经过我们的考察发现,如果直接在美国设立办事处,效果并不十分理想。中国人去开辟美国市场,由于存在语言、文化等方面的巨大差别,显得十分吃力。而印度软件出口业之所以成功,很大程度上缘于三点:第一点:留学生资源。他们的1/3的留学人员留在国外,2/3的人员回国,而且在国外的人员有很多已经在美国软件企业中做到了中高层的位置,他们具备获取这些订单的能力,而我们国家的留学生大部分还只是在做底层的开发,并没有能力获得订单;第二点:印度天然的语言优势。印度的官方语言为英语,不存在很大的文化差异和沟通障碍;第三点:印度软件业的质量意识。据统计,全球通过CMM5的软件企业总共23家,印度就占了 15家。这是印度之所以成为美国主要软件出口基地的重要原因之一。所以我们毅然采用了用软件外包市场本土的营销人员来开辟其本土市场的市场营销模式,这也是我们同美国GSS公司签订合同的主要原因,当然这也要求我们严格按照国际商务准则来运作。同时通过与本土的营销人员合作还可以收集到很多源于竞争对手的信息,比如印度或者俄罗斯的商业计划书是如何书写的?他们有具备哪些优势和劣势?这些都是我们制定相应战略的基础。同时他们也把国际外包市场最好的培训信息,最新的技术动态给我们传递过来。通过这样高起点的跨国经营管理将公司的整个层次都提高了很多。"  (See .)
Announcement: CISIS Outsourcing Business Development Forum Presentation

I will be giving a presentation on IT outsourcing market opportunities during next Thursday's CISIS Outsourcing Business Development Forum.  The CISIS (China International Software & Information Service) Fair begins next Wednesday morning (the 28th) and goes through Friday.  See for more information.
I will be in Dalian from Wednesday afternoon through Friday evening.  If you are planning to attend this event or are based in Dalian and would like to get together, please let me know.  I am keeping Friday open for meetings, although it's filling up fast.  Also, there is a reception (of sorts) on Wednesday night on the 3rd Floor at the Shangri-La beginning at 19:00; I'll be at the "reception" for at least the first hour.  I look forward to seeing many of you next week!
ITO Tidbits
From the mouth of Infosys' COO, "In terms of infrastructure, China scores higher than India."  (From a Networld World supplement on outsourcing; see .)  From the marketing veep at Silicon Valley-based Sygate, "The cost structure is pretty spectacular; it's about one-eighth that of the U.S."  Sygate is similar in structure to Achievo:  U.S. headquarters with most of the development work done in China.  (Achievo is one of the few firms that should be on just about everyone's short list.)
And how about this:  "Gartner has claimed China could overtake India's outsourcing crown by 2007 with its 2,00,000 (sic) software professionals and a booming domestic software market with spending on IT increasing by 20 per cent per year since 1999."  A couple of grammatical errors, but an interesting remark from Gartner.  (The grammatical errors are likely the responsibility of the publisher, not Gartner.)  See .
On the "downside," a look at ITO's "hidden costs", in CIO Australia.  See .  Nothing terribly new, but a good case study.
For some advice on how to manage the seams between multiple outsourcing relationships, see .  THIS IS A STICKY ISSUE, especially since many of China's larger SIs want to sub-contract (in essence, further outsource) to smaller SIs.  Frankly, I'm a bit suspicious about this:  It requires a lot of faith from an American client.  It's the "I barely know YOU, and I have NO CLUE who these other guys are" problem.  Sounds like a one-way ticket to getting fired for an American IT exec.
A bit of common sense from an IDG news blurb.  Talks about sending out RFPs to about 50 companies, a small trial project, and the need for collaboration technology.  See the IDG piece at .
Finally, "(i)n a survey of top decision makers on corporate outsourcing policies, 59% said they expect to increase their outsourcing budget by 20% or more in the next 18 months."  Also, the so-called outsourcing debate has had little impact on outsourcing decisions and "lost knowledge" was cited as the key workforce-related risk.  See the Patni press release at .  It's also a pretty good example of the right way to issue a self-serving press release.
David Scott Lewis
President & Principal Analyst
IT E-Strategies, Inc.
Menlo Park, CA & Qingdao, China
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